This is the question on everyone’s minds. Everyone is regretting not owning bitcoin right now. People are calculating how rich they would be if only they had bought in at the right time. Then everyone wonders if they should buy in, because the price keeps going up. Let’s look at some basic investing logic to decide whether bitcoin is still a good investment or not.
How to evaluate investments
Every investment is evaluated based on the return – how much you will get if you put in a certain amount of money. Now, the basic concept is simple. You buy low and you sell high. You buy a stock, an asset, or a cryptocurrency when the price is at its lowest then you wait for the price to go high. When the price is at the highest you sell what you own, making a huge profit in the process.
In reality, things aren’t that simple. First of all, when the price of something is going down you don’t know whether it will keep going down or if it will come back up. It is possible to buy low and still lose money because what you bought went even lower. Then there’s the fact that you never really know when the price is the highest it will ever be. If you keep waiting until the price stops going up, you will be selling the asset at the same time as everyone else, which will lower the price you get for it. This is how people become rich and how people become poor while investing – it is all about buying and selling at the right time.
This isn’t the first time bitcoin’s price is rising, though it is the first time that they are rising this much. Now, conventional investing advice would say that you should not invest in bitcoin. They would look at the fact that its price has more than doubled in the last month and say that it may be overvalued, so you may lose money on it.
The problem is that this investment advice has never really applied to bitcoin. Consider the fact that people were saying you shouldn’t buy Bitcoin when it crossed $7,000 because its value was too high. A month later it was $14,000. Bitcoin keeps going up. Now, can we know for sure if bitcoin’s rise will continue? No, we do not? However, at the same time, do we have any reason whatsoever to believe that the rise is coming to an end soon? We don’t. There are even some analysts who say that bitcoin may end up touching $40,000 by the end of 2018. Now, a few months ago that claim would have been ridiculous, but right now it makes perfect sense.
We think you should still buy bitcoin, but do note that you will not be able to make as much of a profit as the people who bought in even earlier.